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Jacek J. Wojciechowicz, PKP S.A.
based on the presentation by Radek Czapski, Kate McMahon
and Said Dahdah, The World Bank
• Willingness to pay surveys
• Human capital approach• “Rule of Thumb” using ratio of Value of
Statistical Life (VOSL) to GDP per capita
• GDP per capita plus pain, grief and suffering
• Internationally preferred method.• Requires complex surveys to obtain
estimates.• Assumes ability of respondents to give
accurate and consistent answers to hypothetical questions.
• Questionable reliability in developing countries.
• Medical costs, net lost output and accident costs are added to the WTP value.
• Measures loss to society in terms of lost output.
• Less comprehensive than WTP as it does not value non-economic element of the loss of human life.
• Less demanding valuation method but requires good data on output.
• Medical costs and accident related costs are added.
• Economic theory proposes that the worth of a good is what people are willing to pay for it.
• No difference in principle between market goods such as cars and non-market goods such as safety.
• But establishing WTP for non-market goods is more challenging.
• Should the VOSL vary between high income countries and low income countries?
• Surely a life is a life and of equal value?
• But WTP is strongly influenced by income.
• It is also likely to reflect cultural attitudes to safety and the priority given to it.
• It is legitimate to use VOSL that takes account of income, whether estimated by WTP or human capital.
• Deriving VOSL from range of ratios of VOSL/GDP per capita from developed country estimates would provide a rule of thumb approach that would avoid costly and impractical surveys.
• Review estimates of VOSL from a range of developed and developing countries.
• Calculate ratios of VOSL to GDP per capita.
• Select upper and lower limits and preferred ratio to apply to developing countries.
• Estimate VOSL by multiplying ratio by GDP per capita for each pilot country.
• Does not require medical costs to be added, but accident costs needed for value of fatal accident.
Country VOSL GDP per capita VOSL/GDP per capita
USA $ 3m $ 34,851 86
Canada C$ 1.760m C$ 34,173 52
Netherlands € 1.806m € 26,400 68
New Zealand NZ$ 3.065m NZ$ 30,480 99
Sweden € 1.327m € 19,663 55
UK £ 1.384m £ 18,230 76
Country VOSL GDP per capita VOSL/GDP per capita
Malaysia RM 1.200m RM 9,302 130
Cambodia $ 18,864 $ 317 60
Indonesia Rp 255.733m Rp 7.142m 36
Laos $ 4,671 $ 336 21
Myanmar MK 4.806m MK 68,099 71
Philippines $ 41,330 $ 982 42
Singapore S$ 1.368m S$ 33,238 36
Thailand B 2.741m B 51,008 54
Vietnam D 162.620m D 3.844m 42
Country VOSL GDP per capita VOSL/GDP per capita
Bangladesh
(TRL)
Tk 889,528 Tk 16,169 55
Kenya $ 25,000 $ 430 58
India (WTP) Rs 1.311m Rs 23,578 56
� Less straightforward than VOSL due to differences in definition and in injury distribution.
� More severe injuries likely in developing countries: more VRUs, lower reporting rates of less severe injury, poorer long-term outcomes with higher disability levels due to lower levels of trauma care.
� But higher death rate from injury removing most severe cases.
� Human Capital Approach or WTP
(require lots of data collection)
� As Percentage of Value of Statistical Life (VOSL)
� Easy to use but biased by variation in injury mix
Country VSL VSI VSL/VSI
Australia 1.832 m 397,000 22%
France 1.156 m 124,987 11%
Germany 1.161 m 86,269 8%
New Zealand 3.050 m 535,000 18%
UK 1.384 m 155,563 11%
USA 3.000 m 510,000 17%
� VOSL- PLN 2.8 mln
� VSI- PLN 700 000
� 2013- 34 fatalities=PLN 95 200 000*
� 2013- 35 serious injuries= PLN 24 500000*
� Total estimated costs of level crossing accidentsin Poland in 2013: PLN 119 500000
� or approx. Euro 29 000 000*
� Estimated costs between 2005-2013: PLN 1bln 426 thousand or Euro 375 mln*
*Source: Own calculations
� HEATCO Blue Bookhttp://blog.optimaconsulting.com.pl/wp-content/uploads/2011/01/20110102_Model_PRZYKLADOWY-PROJEKT_NK_150_50.pdf
� Research Institute of Roads and Bridges
� In 2012
� Cost of fatality- PLN 2.5 mln
� Cost of serious injury- PLN 1,1 mln
� Cost of light injury- PLN 15 000
� Material costs of road accident- PLN 80 000
� The methods proposed above were used to calculate the costs of road accidents in selected countries.
� The calculated costs do not take intoconsideration the material costs (vehicles, infrastructure)
� Thank You